Opinion
The higher potential exposures indicate deep and ingrained issues within the home loan market, and the time for a concerted industry response is now.
The detailed mortgage fraud and loan irregularity reviews being conducted by banks across the sector have uncovered ballooning levels of potential exposure, and the estimates are nothing but conservative.
Across the major banks and Macquarie, loans identified as suspicious or fraudulent so far have swelled to about $3 billion, people with knowledge of the investigations told this columnist on the condition of anonymity.
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This category refers to crimes committed by employees or insiders against their own organizations. It is often the most damaging because the perpetrator has authorized access to systems.
- Asset Misappropriation: The most common form, involving the theft of company resources. This ranges from simple “skimming” (taking cash before it’s recorded) to complex schemes involving the theft of inventory or intellectual property.
- Payroll Fraud: Employees may create “ghost employees” on the system, falsify their own timesheets to claim unworked overtime, or divert salary payments to their own accounts.
- Financial Statement Fraud: Management deliberately misrepresents the company’s financial health by inflating revenue or hiding liabilities to attract investors or meet performance bonuses.